Grassley re-introduces payment limits amendment

The National Cotton Council issued a news release saying the legislation, which passed the Senate but was omitted from the 2002 farm bill conference report, would “seriously undermine farmers’ and lenders’ confidence in the new farm bill.

“We have a carefully balanced and effective six-year farm law adopted by Congress after extended debate,” said NCC Chairman Bobby Greene said. “Changing that law before it’s first anniversary would disrupt implementation and cause hardship to U.S. cotton producers and their counterparts in grain and oilseed production.”

An earlier analysis by Council economists showed that Grassley’s bill would put such severe limitations on marketing loan gains and fixed and counter-cyclical payments that many cotton and rice farmers would be unable to obtain production financing. With current commodity prices, many farms cannot cash flow, even with current restrictions on payments.

In its earlier form, the Grassley-Dorgan amendment, as it was named, would have abolished the three-entity rule and restricted farmers to a single payment limit of $225,000 or $275,000 for a farmer and his wife. It also abolished the use of generic certificates for marketing loan payments.

“The new farm law contains specific limitations on program benefits and an adjusted gross income means test that makes participants with substantial non-farm income ineligible for benefits,” said Greene, referring to a new farm bill provision that makes farmers with adjusted gross income of $2.5 million or more ineligible for farm payments.

Greene said farm law participants are required to meet detailed eligibility requirements regarding contributions of management and/or labor requirements, and no producer is eligible for more benefits than the farm unit is entitled.

“The addition of more stringent payment limit provisions or more complicated eligibility requirements will negate the benefits contained in the new farm bill for commercial-size producers,” Greene said. “More restrictive limitations or eligibility requirements would make it difficult to obtain production financing and make orderly marketing decisions at a time when farmers need stability.

“Many farmers would also be driven to make cropping decisions based on program benefits rather than market signals.”

Green said the Council’s analysis indicates corn and soybean acreage could increase up to 2 million acres and increases in specialty crop production in the West could disrupt fragile markets. Further, changes in the already complicated regulations will increase producer’s cost of compliance and further stretch the limited resources of USDA.

Farmers are currently working against an April 1 deadline for signup for the new farm bill under one set of regulations while Grassley’s legislation would severely alter those rules, Greene said.

“The farm law does not need to be amended,” Greene said. “It provides an adequate safety net in times of low prices and meets the budget requirements established by Congress.”